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CANADIAN FORCES COLLEGE / COLLÈGE DES FORCES CANADIENNES AMSC 6 / CSEM 6

COMMAND AND CONTROL OF THE CANADIAN FORCES SUPPLY CHAIN

By /par LCol Neville Russell

October 2003

This paper was written by a student attending the Canadian Forces College in fulfilment of one of the requirements of the Course of Studies. The paper is a scholastic document, and thus contains facts and opinions which the author alone considered appropriate and correct for the subject. It does not necessarily reflect the policy or the opinion of any agency, including the Government of Canada and the Canadian Department of National Defence. This paper may not be released, quoted or copied except with the express permission of the Canadian Department of National Defence.

La présente étude a été rédigée par un stagiaire du Collège des Forces canadiennes pour satisfaire à l'une des exigences du cours. L'étude est un document qui se rapporte au cours et contient donc des faits et des opinions que seul l'auteur considère appropriés et convenables au sujet. Elle ne reflète pas nécessairement la politique ou l'opinion d'un organisme quelconque, y compris le gouvernement du Canada et le ministère de la Défense nationale du Canada. Il est défendu de diffuser, de citer ou de reproduire cette étude sans la permission expresse du ministère de la Défense nationale.

1

ABSTRACT

This paper looks at the issues surrounding command and control of the CF Supply Chain.

First it argues that at the operational level of conflict, the supply chain plays a key role in

providing materiel to the war fighter and logistical situational awareness to the Commander. It

then discusses the problems and inefficiencies caused by the poor command and control structure

currently in place and in particular the problems caused by managing the supply chain in

segments instead of by an integrated supply chain management strategy. Finally, it looks at

current CF initiatives relating to the CF Supply Chain and proposes a number of steps to

improving command and control of the supply chain.

2

COMMAND AND CONTROL OF THE CANADIAN FORCES SUPPLY CHAIN

By Lieutenant-Colonel N.E. Russell

INTRODUCTION

Alexander, Frederick the Great, the Duke of Wellington, and Field Marshal

Viscount Slim, are a few of a small but esteemed group of individuals who through their deeds in

preparing, orchestrating and leading armies in conflict have earned the reputation as great

commanders. A common thread associated with the success of all their campaigns was their

mastery of logistics concepts, and in particular the role of the supply chain. This is due in large

part because what is possible operationally depends on what the supply chain is capable of

supporting.

The Duke of Wellington understood this perfectly. During his peninsula campaign of

1812 he stressed the importance of ”… following the history of a biscuit from its leaving Lisbon

until it reaches a soldiers mouth on the frontier.” 1 His supply chain had three distinct

components: the rear line of barge traffic linking Lisbon to intermediate depots, the ox-wagon

convoys to forward supply depots, and lastly the divisional and regimental mule-trains supplying

the individual units at the front. Because Wellington placed great importance on logistic details

such as the combat load a soldier could be realistically expected to carry, the loading of mules,

the daily distance an ox cart could be realistically expected to cover, and the positioning of

supply depots he was able to maximize the daily distance his army could travel and the physical

condition in which his soldiers arrived in at their destination.

By synchronizing logistics with combat operations, Wellington was able to forestall

culmination in his Peninsula Campaign. Further, Wellington was able to keep his forces

3

continually concentrated and employed decisively, while the much larger French forces were

forced to constantly break down into widely dispersed units, in order to forage for food. This

gave him a significant advantage in operational reach, and an ability to operate at a higher tempo

of warfare than that of his French counterparts.

For commanders at the operational level of war, the supply chain is as important today to

as it was in Wellington’s era. Logistics is a function of command. The supply chain is the artery

on which sustainment, or as Julian Thompson calls the “lifeblood of war” 2 flows. To exercise

control at the strategic, operational, and tactical levels of war, commanders must also exercise

control over the supply chain. 3 As Field Marshal Wavell noted in 1946:

It takes little skill or imagination to see where you would like your army to be and when; it takes much knowledge and hard work to know where you can place your forces and whether you can maintain them there. A real knowledge of supply and movement factors must be the basis of every leader’s plan; only then can he know how and when to take risks with those factors and battles are won only by taking risks. 4

Controlling the supply chain and gaining knowledge of supply and movement factors

requires effective command and control (C2) both to coordinate the provision of timely material

and services to the combatants and to provide logistical situational awareness to the

commanders. However, the Canadian Forces (CF) Supply Chain is a huge, complex and

expensive network of processes, information technology and organizations. Further, it faces two

significant challenges. First, it needs to address deficiencies outlined in after action reports and

CRS and AOG audits so it can improve its performance in supporting the increasing operational

tempo of the CF.5 Secondly, when the decision was made in November 2002 not to proceed with

Phase II of the Supply Chain Project (SCP)6, it was done in the expectation that similar savings

to those expected from the SCP, approximately $46 million, could be achieved in house. 7

4

To meet these challenges the supply chain will need to become fully integrated, but to do

so will require reengineering. However, as the US Government Accounting Office has noted,

supply chain reengineering is more successful when various supply chain activities are viewed as

a series of interconnected processes rather than isolated functions since “Changes in one element

of the supply chain are likely to affect the cost and/or performance of other processes.”8 A

proven business strategy that addresses this problem is Integrated Supply Chain Management.

When applied in the private sector, effective management of the supply chain has not only

improved the flow of materiel’s from the supplier to the customer, thereby increasing customer

satisfaction rates, but at about half the cost.9

The biggest obstacle to the CF in gaining the benefits of an integrated supply chain

management approach is C2. The supply chain is not commanded by one individual, but rather

guided by staff in the J4 Mat/DG Log Division. Decisions are made by consensus with the

various Environmental Chief of Staffs (ECS), Equipment Program Managers (EPM) and other

stakeholders. Since the optimum output of the entire supply chain often requires some

organizations within the supply chain, which often have competing objectives, to operate sub-

optimally, decision-making is an extremely long, arduous and often unsuccessful process.

This paper will demonstrate that the supply chain, being an essential part of the

operational level of conflict, requires a single authority for effective C2 with the resources,

responsibility and authority to manage it as an integrated supply chain.

LOGISTICS, SUPPLY CHAIN AND C2 DEFINED

I don’t know what the hell this ‘ logistics’ is that Marshall is always talking about, but I want some of it.

Admiral Ernrst King, USN To a staff officer, 1942

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Logistics has existed since the formation of the first armies, but as a branch of the

military arts it is by far the least studied. Logistics just does not have the military sex-appeal of

strategy, or tactics and General Nathaniel Green was probably right when he said “Whoever

heard of a Quartermaster in history as such” 10, but nevertheless logistics has and likely always

will play a central part in the strategic, operational and tactical levels of war.

Martin van Creveld in Supplying War; Logistics from Wallenstein to Patton defined

logistics “… as the practical art of moving armies and keeping them supplied.”11 RAdm Eccles

defined it as, “… the creation and sustained support of combat forces and weapons.”12 Today

Canada uses the NATO definition of logistics:

… the planning and carrying out the movement and maintenance of forces. It includes those aspects of military operations that deal with: a) design and development, acquisition, storage, movement, distribution, maintenance, evacuation and disposition of materiel; b) transport of personnel; c) acquisition or construction, maintenance, operation and disposition of facilities; d) acquisition or furnishing of services; and e) medical and health service support.13

The supply chain is a major component of military logistics and in many respects it is the

heart of logistics. Although it has existed as a function of logistics since the formation of large

armies, the term supply chain is of recent vintage, originating in the business world in the late

1980s.14 A supply chain is the integration of all the processes needed to efficiently deliver

products to the end user.15 The DOD military dictionary defines supply chain as “The linked

activities associated with providing materiel from a raw materiel stage to an end user as a

finished product.”16 With respect to the above logistics definition the supply chain consists of all

links involved directly, or indirectly, in fulfilling a customer demand including all aspects of

“design and development, acquisition, storage, movement, distribution, maintenance, evacuation

and disposition of materiel.”

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The purpose of the supply chain is to serve its customers. Consider an aircraft technician

servicing a CF188 while on a deployment at Forward Operating Location Inuvik. The supply

chain begins with the customer, in this case an aircraft technician and his need for a spare part.

The next link is the squadron supply section, which stocks its deployable spares account using

inventory supplied from the Wing Supply Squadron at 4 Wing, which in turn is supplied from

one of the Canadian Forces Supply Depots (CFSD). The depots in turn are stocked from

suppliers. Supporting elements include policy, procurement, and materiel and distribution

management personnel. The CF Supply Chain is dynamic and involves the constant flow of

goods, materials and information between each link from the original supplier to the customer

and, when not consumed, back for storage, or repair.

Supply chain management (SCM) is the strategy of managing these logistics functions at

each link from the commercial supplier to the war fighter. “The broad goal of supply chain

management is to effect a seamless flow of products from cradle to grave with the fewest

resources and the highest customer service possible.”17 Information is what links, or integrates a

supply chain together. Operational efficiency is the result of effective SCM.

Command and control is:

… the exercise of authority and direction by a properly designated commander over assigned and attached forces in the accomplishment of the mission. Command and control functions are performed through an arrangement of personnel, equipment, communications, facilities and procedures employed by a commander in planning, directing and coordinating and controlling forces and operations in the accomplishment of the mission. Also called C2.18

The ability of Commanders to focus those resources at their disposal on a single objective

relies in large part on the effectiveness of C2. It has three principal components: structure,

procedures and communications.

7

However, recently Dr. Ross Pigeau and Carol McCann, of DRDC, Toronto, have

proposed a new scientific model of the concept of C2. They have taken a humanist approach to

the function of command and define it, “… as the creative expression of human will necessary to

accomplish the mission.”19 In their model they make the important distinction that command is

not limited to commanders and allows for even individuals to command. They define control as

“… those structures and processes devised by command to enable and manage risk.”20 Their

Competencies, Authority and Responsibility (CAR) model is composed of three dimensions:

competencies - physical, intellectual, emotional, and interpersonal; authority - legal and personal;

and responsibility - extrinsic and intrinsic. They assert that effective command rests on an

optimal balance between these elements. In other words to be effective a commander must have

the necessary competencies, authorities and level of responsibility appropriate for his position.

According to Pigeau and McCann “…it is the region that best protects militaries from dangerous

or ineffectual command, and it is the region where motivation and initiative are maximized while

the likelihood of poor performance and fear of failure are minimized.”21

IMPACT OF LOGISTICS ON THE OPERATIONAL LEVEL OF CONFLICT

A campaign plan that cannot be logistically supported is not a plan at all, but simply an expression of fanciful wishes.

John Meehan 22

In studying World War I and their own civil war Russian military theorists

realized that logistics and movement (through railroads and road nets) played a vital role

in determining the scale, scope and depth of military operations. As a result in the mid-

1920s, Soviet Army Staff Chief Mikhail N. Tukhachevsky ordered the staff academy to

incorporate logistics into their operational level exercises. Bruce Menning states that

8

some Russian commentators later asserted that consideration of support in tandem with

operations actually gave birth to the concept of Soviet operational art. 23 Captain (N)

Hughes in his article Naval Maneuver Warfare states that maritime operational art is

almost synonymous with operational logistics, referring it to one of the three prongs of

the naval trident strategy, logistics and tactics. He further argues that it is the “logistical

question, which is the solid, computable core of operational art that needs to be answered

if tactical force requirements can be brought to bear quickly and surely in order to fulfill

the strategist’s goal.” 24

When the logistics support is not available at the place where it is needed,

campaigns, or strategic opportunities can be lost. In early September 1944 after

exploiting the tactical victories of the Falaise Pocket from August 20th to 22nd the forces

of General Eisenhower, Supreme Commander Allied Expeditionary Forces, seemed on

the verge of driving through to victory in Germany. However, by the end of September

this offensive, which if successful might have changed the whole post-war political

situation in Europe, was halted due to the lack of gasoline and ammunition. The allies

could not ship enough ammunition and fuel fast enough through the supply chain from

North America to the ports in France and onward to the Allied frontlines. “For the next

two months supply limitations were to dominate the real meaning of the tyranny of

logistics.”25 This truism is still valid in modern day conflicts. In the Gulf War, Dick

Cheney, Secretary of Defense, when briefed on logistical problems by General

Scwarzkopf, acknowledged that the timing of the ground attack was subject to logistical

constraints, stating “… we can’t try to force it too early”26

9

At the strategic level, economic capabilities limit the combat forces, which can be

created. At the same time, at the operational and tactical levels, logistic capabilities limit

the forces, which can be employed in combat operations.27 Further, the supply chain is

not only required for every operation at each point along the spectrum of conflict and at

all levels, but it flows from the strategic level, the Canadian economy to military depots,

down through the operational level (National Support Element and in the future the Joint

Support group (JSG)) to the tactical level (the unit supply section) in one continuous

supply chain.

Logistics is a function of command because it governs the tempo and power of

operations. The supply chain provides the food, clothing, fuel, munitions and spare parts

to make weapons systems ready. Furthermore, the supply chain gives commanders

information. For instance, it allows commanders to determine whether their forces have

the necessary sustainability for upcoming operations.28 To develop an effective campaign

plan, commanders and their staff need to have a good indication on how the supply chain

is going to perform - what it can provide and when it can provide it. Likewise, without

timely and accurate feedback on actual and potential usage from operators, in terms of

consumption, unserviceable repairables and pre-positioning requirements, the supply

chain cannot respond and adapt and logistics performance will suffer. Information needs

to be fed from the operational staff and end users, back into the supply chain, from the

unit supply section back through the operational and then to the strategic level where new

purchases can be made and contracts let. As we move to a distribution–based

replenishment system, just in time; not just in case will be the rule so quick passage of

information will become even more vital to compensate for lower inventories.

10

THE CANADIAN FORCES SUPPLY CHAIN

The CF Supply Chain has an inventory of 1.2 million NATO Stock numbers worth $10

billion. Approximately, $1.2 billion in annual national procurement flows through the supply

chain. It is composed of a host of customers, suppliers, contractors and CF logistics sections,

units and directorates. Theoretically, it operates on the basis of centralized control from NDHQ

and decentralized delivery by the ECSs. In 2001, the estimated annual cost of the supply chain

was $366 million.29

ADM Mat has the overall responsibility for policy for all aspects of materiel support,

from acquisition, to in-service support and disposal. J4 Mat/DG Log (BGen) is the senior advisor

for supply chain operations and the J4 Mat/DG Log division is the focal point for supply chain

activities. The Directorate of Materiel and Distribution develops and implements supply policies

and manages the Canadian Forces Supply System Upgrade. The Directorate of Logistics

Business Management develops and implements transportation policies and manages the

National Materiel Distribution System (NMDS). J4 Logistics operates the National Defence

Logistics Co-ordination Center and the co-located National Defence Movement Control Centre

coordinating supply chain support to domestic and international operations. J4 Mat/DGLog has a

number of field units that also support the supply chain. For deployed operations 3 Canadian

Support Group provides materiel management/processing and distribution support and 4

Canadian Forces Movement Control Unit provides strategic and operational movement services.

Finally, 7 and 25 CFSD provide fourth line supply and materiel/distribution services to CF

bases/wings and units.

Although, the J4 Mat/DG Log division is the principal focal point, other ADM Mat

divisions also conduct supply chain activities: ammunition management through DGEPS, and

11

weapon system spares parts procurement through DGAEPM, DGLEPM and DGMEPM. The

ECSs also own part of the supply chain through unit supply sections, close and general support

units, Wing/Base supply and traffic sections, and Air Movement Squadrons and are responsible

for delivery to the customers. In the near future the DCDS will also impact on the supply chain,

not only as a customer, but also through the JSG, which will act as the overseas link between

Canada and overseas unit supply sections.

SUPPLY CHAIN C2 ISSUES

The instruments of battle are valuable only if one knows how to use them Charles Ardant du Picq Battle Studies 1870

In the 1990s, the CF Supply Chain underwent a significant transformation. Two CFSDs

were closed and the two remaining CFSDs were modernized. The workforce was substantially

reduced and inventory was rationalized, including devolution of responsibility for supply of non-

centrally managed items. Technology was improved, albeit slowly. Initiatives to improve the

performance of the supply chain had been identified and people were capable and motivated to

implement them; however, the unrelenting resource reductions of the nineties made it difficult

for the military to keep pace with the private sector. Further, from January 1998 until November

2002 many improvement initiatives were cancelled, or indefinitely postponed to avoid possible

conflict with the SCP. 30 The net effect of the resource cuts combined with the devolution and

decentralization policies of this period was a fragmentation of the CF Supply Chain. This

fragmentation led to gaps in process ownership, accountability and oversight. No single

individual had the authority, responsibility and the resources to make end-to-end process

12

changes. As per figure 1 below, C2 is carried out in a combination of organizational and/or

functional stovepipes instead of by process across the entire supply chain.

WarehousingMaterialControl Distribution Customers

(Requirements)Suppliers R & OProcurement

PWGSCDGAEPMDGLEPMDGMEPMDGEPS

DMMD DMMDDGAEPMDGLEPMDGMEPMContractors

DMMDCASCLSCMS

DLBMCASCLSCMS

DCDSCASCLSCMS

Figure 1: Fragmentation

Consequently, no proper framework for performance management was developed,

policies became guidelines and single common standards disappeared. With the chain broken

and segmented amongst many owners, each with its own goals, policies and interests, the chain

became more difficult to coordinate. The result was a wide variability in the management and

delivery of supply chain activities at the Wing/Base level and for deployed operations.31

In September 2002 a cross functional/environment working-group concluded that

because of the fragmented accountability structure and the lack of an overall control or

management system a number of undesired consequences occurred. These consequences were:

“Wastage, carelessness, loss; confusion of aim, loyalty (functional vs. operational); savings in A

drove costs in B; no incentive to conform to policy, command, etc; and Priorities and SHC could

be manipulated to advantage.”32

It was not that the problems were unexpected, they had been repeatedly been identified in

DMMD studies, or CRS reviews, but there were insufficient resources available to deal with

them all. Further, new ideas that would improve the performance of the entire supply chain, but

13

at the expense of some its segments, would go nowhere because the lack of authoritative power

meant universal acceptance had to be achieved. The single-tier warehousing concept put forward

by the Inventory Management Control Team, as part of the MCCRT reengineering efforts, met

this fate. 33

Because the supply chain has become fragmented, a number of serious inefficiencies

have developed including; poor synchronization, gaps in responsibilities and process overlaps.

Synchronization: An effective supply chain needs to be synchronized. It requires each

link to take into account the impact its actions have on the complete chain and this can only be

done though effective C2 over all links in the entire supply chain. This is because it is the

synchronization of activities among the members of the supply chain that counts.

Synchronization requires purposeful design and engineering of supply chain networks.34

“synchronization includes matching the goals of the interdependent parts and linking their

priorities with other parts of the organization. When conditions change, synchronization realigns

the multiple priorities and reallocates resources.” 35

Poor synchronization is due to lack of coordination. The lack of coordination leads to a

degradation in customer service and an increase in cost within the supply chain. A lack of

coordination occurs when different links have different objectives that conflict.36 As a result,

each link tries to optimize its own local objectives, resulting in actions that often diminish the

performance of the entire supply chain. The following three examples illustrate this point.

First, supply managers do not work for the J4Mat/Log Division and although their

procurement decisions have a significant impact on warehousing and distribution costs, they are

not held accountable for them. This lack of accountability and poor coordination has led to the

accumulation of dormant stocks, problems with the stockpiling of repairable reserves, sub-

14

optimal positioning of stocks and unacceptable stock out rates.37 Although a bulk buy may seem

sound financially on its own merits unless all the costs including inventory, order processing and

distribution costs are factored in, the true cost of procurement cannot be determined. In addition,

by splitting the process of satisfying a customer requirement into two organizational stovepipes,

procurement in the EPMs (the supply side) and materiel management and distribution in J4

Mat/DG Log (the demand side) the link between supply and demand is broken. This inhibits

communications and customer responsiveness.

Second, Project Management Offices in capital projects rarely consult with supply chain

stakeholders, but their decisions have the same impact on the supply chain, as do the supply

managers. Without obtaining warehousing, order processing and distribution costs, decisions to

use, or not to use the supply chain are not based on total cost and therefore can end up being sub-

optimal to the CF.

Third, in June 2003, in order to reduce the cost of supporting the CF188 fleet DGAEPM

staff developed a draft CF188 Concept for Operational Weapons System Management

(OWSM).38 The concept includes the contracting out of a large range of spare part line items for

C188 spares to Boeing Ltd. If implemented this would become the third grouping of spares for

the CF188 weapons system to be contracted out, CATEF and BLISS being the others. Since the

CFSS also still provides support, squadron supply sections would have to deal with a fragmented

supply chain consisting of four stovepipes each with their own information technology system,

rules, procedures, and customer service contacts. When deployed overseas the challenges of

coordinating four pipelines for one weapon system into a theatre of conflict would become even

more difficult. Although it would have a direct impact on the efficiency of the CF Supply Chain,

the OWSM concept had been developed in isolation without consulting supply chain

15

stakeholders. Since there is no single organization controlling and coordinating changes to the

supply chain no one is in a position to determine the trade-offs between the benefits to DGAEPM

of implementing their concept compared to the inefficiencies created in other links of the CF

supply chain - in this case increased workload for the squadron supply sections and an

underutilized CF warehousing and distribution system.

Gaps in Responsibility: Fragmentation also causes inefficiencies to develop in between

the areas of responsibility of different elements within the supply chain. For instance, the

Minister of National Defence’s Advisory Committee on Administrative Efficiency noted that

reducing contractor held spare parts could save $10 million annually. This inefficiency

developed in the gap in responsibility between EPMs and DMMD. In addition the committee

identified that there was no visibility of the costs associated with maintaining surplus equipment

in a useable state while it is being marketed for sale. In this case the responsibility gap is

between ECSs and ADM Mat. 39

Process Overlaps: The same committee also identified an overlap in the procurement

process between DND and PWGSC. Further, it stated the procurement and leasing of

information technology and software was often obtained at a higher than necessary cost because

of the dilution of spending power due to the overlaps and redundancies among all Level One

managers within DND.40

As demonstrated, fragmentation makes it difficult to develop and sustain a system wide

view of the entire supply chain.41 Although individuals understand and operate their segment of

the supply chain quite well, no one in the CF has a clear understanding of how all the segments

fit together or how to optimize the entire supply chain. Further, and very similar to problems

16

experienced by the USAF, no one has the effective authority to optimize it and no one is held

accountable to optimize it. 42 As a result, inefficiencies develop, but no action is taken.

Currently, ADM Mat has delegated the responsibility for coordination of the supply chain

to the J4 Mat/Log Division. Although the division may have the responsibility, it is not

structured nor does it have sufficient resources, or the authoritative clout to control the inputs

into the chain from the other ADM Mat divisions and therefore cannot adequately influence the

outputs to the customers. Likewise, it cannot control the performance of ECS units that carry out

the movement of assets and information through their respective links in the pipeline. Further,

even within the division it has missed an opportunity to increase supply chain integration by

segregating materiel management and transportation management into separate directorates,

DMMD and DLBM respectively.

When evaluated against the Pigeau/McCann CAR model the problem becomes clearer.

J4 Mat/DG Log would be expected to have the competencies and the level of responsibility

commensurate with his position as the senior advisor for the supply chain; however, he does not

have sufficient authority to influence decisions affecting the supply chain that originate outside

his division. Authority in terms of both a clear mandate and performance goals and the power

over sufficient resources have not been assigned. According to the CAR model this type of

situation could lead to ineffectual command. “Without sufficient authority, a commander is

compromised in his position,” 43 or in this case unable to exert effective C2 over the supply

chain.

Much of this problem can be attributed to the manner in which NDHQ is structured.

Although NDHQ has centralized authority it leaves accountability relatively decentralized. “This

17

imbalance between authority and accountability appears to be at the heart of the lack of trust in

senior leaders and higher headquarters today.”44

Further, the matrix style organizational structure at NDHQ has led to decision-making by

committee where each stakeholder has the power to delay or veto initiatives that may impact on

their area of responsibility. Further, in a matrix organization, which emphasizes the horizontal

flow of authority,45 the lines of authority and responsibility become blurred making it difficult

sometimes to resolve conflicts.46 As observed upon by the Advisory Committee on

Administrative Efficiency “ accountabilities [including responsibilities and authorities] are too

diffuse – with insufficient attention paid to the identification assignment and enforcement of

senior management accountabilities and, consequently, defence relies extensively on consensus

as a decision making philosophy.”47 Since the supply chain consists of numerous organizational

elements, with differing objectives, it becomes very difficult in a matrix style organization to

optimize the whole when it means some of its parts may be sub-optimized. Instead small

compromises that accomplish little are agreed to instead of decisions supporting decisive action.

SUPPLY CHAIN INITIATIVES

With the decision in Nov 2002 to not proceed with Phase 2 of the SCP, ADM Mat

decided to achieve similar savings from an in house solution called the Materiel Acquisition &

Support Optimization Project (MASOP). The aim of MASOP is “… to achieve an integrated

cost effective and efficient MA&S process, which supports force generation and sustainment,

while focusing on the areas of warehousing, distribution, POL, clothing, ammunition, calibration

and quality assurance.”48

18

MASOP has already underway a number of major initiatives. Warehousing and

Distribution Optimization proposes to establish a Hub and Spoke distribution system based on

materiel flowing through the major depots in Montreal and Edmonton and two smaller depots in

Halifax and Esquimault. These sites will act as “Hubs” and all other sites will act as “Spokes”.

A two-tier inventory model will be used; wholesale (2nd and 3rd line) and retail (1st line). Trading

knowledge and mass for speed, inventory will be consolidated as much as possible in the hubs

and then distributed quickly to the spokes. Optimization will be achieved by determining the best

trade-off between inventory holding and transportation costs as components of the overall supply

chain costs.

In-Bound Transportation Optimization will arrange the transportation for delivery of

goods rather than allowing the related shipping costs to be determined by the vendor, who has

little incentive to keep them low, and simply included in the cost of procurement. Ammunition

optimization will look at repositioning of inventory, reducing handling and distribution by

implementing direct delivery from supplier, rationalize maintenance of ammunition and

eliminate obsolete stock.49 Other initiatives for clothing, POL and quality assurance are also

underway, however, to date there are no initiatives to address supply chain C2.

MASOP was set up as a separate project partly because DMMD had already

identified a plethora of major improvement projects, but lacked the personnel resources to action

them fully. 50 MASOP has a large mandate. Not only does it have to fund internally

improvements to the supply chain it also needs to achieve approximately $46 million in savings.

Decisions will have to be made to improve the performance of the entire supply chain that may

be detrimental to the objectives of individual links within the supply chain. It will entail an

unprecedented level of coordination amongst all organizations and a leadership that has the

19

resources and authority to effect changes. Although resourced adequately with keen and

knowledgeable logisticians, MASOP does not have the authority to implement changes without

obtaining the permission of all stakeholders. Since personnel cuts and organizational changes

will be required from most of the stakeholders, the lack of authoritative power will likely be the

biggest challenge for the project to overcome.

Defence Total Asset Visibility (DTAV) is a separate initiative, which will play a key role

in improving Log C2. At end state, this capability will provide users with timely and accurate

information on the location, movement, status and identity of personnel, equipment and supplies.

DTAV is not a COTS product but an environment. The presentation interface that the user sees is

supported by five layers; decision support applications, middleware, database administration,

data migration, and operational data. Currently, DTAV allows visibility into five subject areas;

supply, in-transit, personnel, operations, and vehicles. Development of a sixth area -

Performance Measurements - has already begun for AVPOL and Health Services. The system is

expanding rapidly in size. It currently has 1600 users and processes over 18000 queries a week.

Quality is also improving as DTAV highlights quality control issues for data being fed to DTAV

from source systems, i.e. People Soft, CFSSU, FMS, SAP, LOOMIS, NMDS, etc. 51

BENEFITS TO IMPROVING SUPPLY CHAIN C2

Successful supply chains are based on three objectives: recognizing the war fighters’

service level requirements, determining the ideal quantity and optimal location for placing

inventories along the supply chain, and developing appropriate policies and procedures for

managing the supply chain as a single entity. 52 By improving supply chain C2 an integrated

supply chain can be achieved and a number of significant benefits realized.

20

By reducing cycle time (the total time to complete a process) goods can flow faster along

the supply chain reducing the quantities of goods required in warehouses thereby bringing down

inventory holding costs (i.e. Dell manufactures more than 50,000 computers a day but carries

less than four days inventory),53 quicker customer response and fulfillment rates are achieved,

greater productivity at lower costs, shortened repair times and equipment readiness, and

improved flexibility for operational commanders.54

With the implementation of total asset visibility, the timeliness and accuracy of

information flow is improved, lowering costs, improving customer service and the quality of the

information required for logistical situational awareness. Without this information comm

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significant reductions in procurement and operating costs. AMR’s supply management strategy

allowed it to reduce its supplier base by 59% in 3 years resulting in more than $250M in savings.

Harley Davidson cut its supplier base from 4,000 to 800 and saved $40M in materials costs.60

THE WAY AHEAD

A good organizational Structure does not by itself produce good performance – just as a good constitution does not guarantee great presidents, or good laws, or a moral society. But a poor organization structure makes good performance impossible12 283.9801 557.16016 TtTn2 08769236023 Tm (a)Tj 12 0 0 12 151.92997 428636023 Tm (a)Tj tls how

aaain min m

strategy would be fundamental to success. Integration could be achieved in three phases as

shown in figure 2 below.

Internal Supply Chain

WarehousingMaterialControl Distribution Customers

(Requirements)Suppliers

Suppliers Customers

Phase 3: External Integration - C2 across entire supply chain

Current: Fragmentation – C2 by combination of organization and/or functional stovepipe

Phase 2: Internal Integration - C2 across internal supply chain

Suppliers Customers

Phase 1: Functional Integration – C2 by functional area

Materials &DistributionManagement

R & O

DistributionManagement

MaterialsManagement CustomersSuppliers

Procurement

PWGSCDGAEPMDGLEPMDGMEPMDGEPS

DMMD DMMDDGAEPMDGLEPMDGMEPMContractors

DMMDCASCLSCMS

DLBMCASCLSCMS

DCDSCASCLSCMS

ProductionManagement

ProductionManagement

Information FlowMaterial Flow Cash Flow

Figure 2: OPTIMIZING THE CF SUPPLY CHAIN

The first phase would involve reducing fragmentation by integrating in functional areas,

the second phase would be integration across the internal (CF) supply chain and the third phase

would be integration across the entire supply chain (to include suppliers). Critical to achieving

integrated supply chain management would be the establishment of an organization that has clear

lines of authority and responsibility to implement the strategic direction. This would normally

involve placing a manager in a superior position relative to supply chain activities and placing

the manger’s authority on a level in the organization’s structure that allows compromise with the

other major functional areas of the CF, i.e. DGAEPM, DGMEPM, DGLEPM, DGEPS and ECS

equivalents. One alternative would be to amalgamate all non ECS supply chain organizations

under a newly appointed DG Supply Chain with the rank of BGen. He would be responsible for

developing CF Supply Chain strategy and act as champion of integrated supply chain activities.

23

This would elevate and structure supply chain management in a manner that promotes activity

coordination and provides an equal voice in resolving resource conflicts thereby creating a

balance of power. This balance of power would ensure that the performance of the entire supply

chain is not sub-optimized to the benefit of a single organization with its own differing

objectives. The DG Supply Chain would remain in the J4 Mat/Log Division to ensure active

coordination with J4 Log and the support it provides to deployed operations.

The next layer of the organization should be decided on “a balance between minimizing

the number of activity groups to encourage coordination while separating them to gain

effectiveness in the management of their technical aspects.”64 A Distribution Network Manager

(network design, warehousing, etc.), Inventory Manager (order fulfillment, demand fulfillment,

manage inventory), Transportation Manager (administer national contracts and safety program),

Supply Chain Policy, Performance Measurements and Audits Manager and an Information

Technology Manager would fit this criteria. Further, a Procurement and Acquisition Manager

would need to be appointed to coordinate capital project impacts on the supply chain and to

control if not actually command supply managers that are located throughout the NICP.

Additional resources beyond those existing in the J4 Mat/Log division would have to be

allocated and appropriate authority would have to be given to the DG Supply Chain to carry out

his responsibilities particularly in regard to setting performance standards for the CF and

enforcing their compliance. This would ensure that the various organizations within the supply

chain network are held accountable for their performance and continually work towards

optimizing the entire supply chain.

24

CONCLUSION

History has shown that commanders who succeeded in war did so because they

understood that logistics governs the tempo and power of operations. They knew that to exercise

control at the strategic, operational, and tactical levels of war, they must also exercise control

over the supply chain. The supply chain provides the food, fuel, munitions and spare parts to the

war fighter. Another critical output of the supply chain is logistical situation awareness. To

develop a campaign plan Commanders and their staff need to have a good indication on how the

supply chain is going to perform - what it can provide and when it can provide it.

The CF Supply Chain is comprised of many segments including the customer, supply

sections, depots, procurement directorates, suppliers, to name a few. Severe resource cuts

combined with the devolution and decentralization policies of the 1990s have resulted in a

fragmented supply chain. C2 of the supply chain is divided amongst many organizations often

within the same functional area. These organizations often have competing objectives. Further,

many organizations have tried to optimize their performance in isolation and unknowingly at the

expense of another link in the supply chain. Poor synchronization, gaps in responsibility and

process overlaps have developed.

To overcome the inefficiencies of fragmentation and optimize the performance of the

entire supply chain it needs to be managed and controlled in a coherent manner with one strategy

under one individual. This does not mean that each link that plays a part in the supply chain

needs to be under command, but they do have be held accountable for working within the

framework of policies, controls and goals set up by the champion. A champion is essential - one

who can articulate the need for change, develop a plan of action, and defend and secure the

additional funding that will be required and then have the authority to implement those changes.

25

Significant benefits have been obtained in the private sector by integrating the supply

chain. The USAF expects similar benefits to accrue from its efforts to integrate its supply chain,

including reduced operating and purchasing costs, increased customer satisfaction rates and

improved logistical situational awareness for commanders. One model for achieving this is the

formation of a DG Supply Chain along with a mandate and clear strategic direction from ECSs,

DCDS and ADM Mat. Although other models are certainly viable, the most important step is to

vest command and control of the supply chain in a single individual with the resources,

responsibility and authority to mange it as an integrated supply chain.

26

END NOTES

1. David Chandler, On the Napoleonic Wars (London, UK: Greenhill Books, 1994), 162. 2. Julian Thompson, The Lifeblood of War Logistics in Armed Conflict (New York:

Macmillan Publishing Company, 1991), Title. 3. United States, Department of Defense, Doctrine for Logistic Support of Joint Operations,

Joint Publication 4-0 (Washington, D.C.: Joint Chiefs of Staff, 6 April 2000), II-5. 4. Martin Van Creveld, Supplying War: Logistics from Wallenstein to Patton (Cambridge:

Cambridge University Press, 1977), 231. 5. These reports include Operation Apollo Lessons Learned Action Directive (SAD) April

2003, Chief of Review Services, Audit of Materiel Support To Canadian forces Deployed Operations, October 2002 and Report of the Auditor General of Canada – December 2000.

6. In 1997 the supply and distribution activities of DND were identified as a candidate for

the Alternate Service Delivery process. The project objectives were: to reduce costs, ensure operational commanders are served effectively (to the extent possible), maximize quality employment opportunities for affected personnel, and ensure customer service levels meet or exceed current satisfaction rates. Tibbet and Britten were awarded the contract for Phase 1 – the deliverables were to redefine the business case and develop implementation and transition plans. Phase 2 would have seen the implementation of the transition activities necessary for the contractor to take over the management of the supply chain. Canada, Department of National Defence, Vice Chief of the Defence Staff, Project Charter: Supply Chain Project, (Ottawa: Department of National Defence, 1999), 1.

7. Mr. Jack Crukshank, PM MASOP, MA&S Optimization Project (MASOP) Presentation

to A4 Log Conference, 29 April 2003, slide 4. available from http://winnipeg.mil.ca/A4Log/Documents/Log%20Conf%202003/Briefings/Main%20Briefings/MASOP%20A4%20Briefing%20Mr%20Cruickshank.ppt

8. Integrated Supply Chain Management Concept Paper, Optimizing Logistics Support. pg

1 Available from http://www.dod.mil/c…ller/center/learn/iscmconcept.htm 9. Ibid, 3. 10. Julian Thompson, The Lifeblood of War Logistics in Armed Conflict …, 3. 11. Martin Van Creveld, Supplying War: Logistics from Wallenstein to Patton …, 1.

27

12. Henry E. Eccles, Logistics in the National Defense (Harrisburg: The Stackpole Company, 1959), 22.

13. NATO Standardization Agency AAP-6 (2002). 14. Douglas M. Lambert, James R. Stock, and Lisa M. Ellram, Fundamentals of Logistics

Management (Boston: Irwin McGraw-Hill, 1998), 504. 15. Keith Pratt, vice president of purchasing for Mail-Well, quoted in Linking up to Manage

Supplies, Graphic Arts Monthly (Aug99, Vol. 71, no 8), 54. 16. DOD Dictionary of Military Terms amended through 5 June 2003, Available at

http://www.dtic.mil/doctrine/jel/doddict/ 17. Christopher R. Moberg, Thomas W. Speh, and Thomas L. Freese, “SCM Making the

Vision a Reality,” Supply Chain Management Review (September/October 2003): 34. 18. Joint Publication 1-02, DOD Dictionary of Military and Associated terms, 12 April 2001,

amended as of 5 September 2003, Available from http://www.dtic.mil/doctrine/jpreferencepubs.htm. Internet accessed 20 September 2003.

19. Ross Pigeau, and Carol McCann, “Re-Conceptualizing Command and Control”

Canadian Military Journal 3, no. 1 (Spring 2002): 56. 20. Ibid, 56. 21. Ibid, 61. 22. John F. Meehan III, “The Operational Trilogy” Parameters, (Autumn 1986): 16. 23. Bruce W. Menning, Operational Art’s Origins Military Review 77, no. 5 (September –

October 1997): 36. 24. Wayne P. Hughes, Jr. “Naval Maneuver Warfare” Naval War College Review, 50, no. 3

(Summer 1997): 45. 25. Henry E. Eccles, Logistics in the National Defense …, 2. 26. General H. Norman Schwarzkopf, the Autobiography It Doesn’t Take a Hero, written

with Peter Petre (New York, Linda Grey Books, 1992), 395. 27. Henry E. Eccles, Logistics in the National Defense …, 41. 28. David A. Schrady, Combatant Logistics Command and Control for the Joint Forces

Commander (Monterey, CA: Institute for Joint Warfare Analysis, Naval Postgraduate School, 1998), 13.

28

29. Capt (N) Y. De Blois, PM SCP, Supply Chain Project Presentation to the MMD Conference, 15 October 2001, slide 3. Available at http://lognet.dwan.dnd.ca/dmmd/dmmd/2001Conf/Presentations/De%20blois%20MMD%2015%20Oct%2001.ppt

30. In October 1997, the Defence Management Committee identified DND supply and

distribution activities as a candidate for Alternate Service Delivery. As a result, in early 1998, the Supply Chain Project (SCP) was formed to conduct an end-to-end review of supply and distribution activities in the CF. Tibbet & Britten Group, one of the largest specialist supply chain companies in the world, won the first phase of the contract. However, in November 2003 the SCP was cancelled due to the inability of the SCP PMO to show sufficient cost savings.

31. Paper Prepared for J4Mat/DG Log by Cornwall WG, MA&S Optimization A Supply

Chain Alternative, 25 September 2002: 1. 32. Ibid, Annex A. 33. Personal experience as A4 Supply, 1 CAD HQ. 34. Robert E. Mansfield, “Improving Spares Campaign Support”: Air Force Journal of

Logistics Vol XXVI, no 3 (Fall 2002): 2. 35. Larry Bossidy and Ram Charan, Execution: The Discipline of Getting Things Done (New

York: Crown Business, 2002), 234. 36. Sunil Chopra, and Peter Meindl. Supply Chain Management: Strategy, Planning, and

Operation (Upper Saddle River, NJ: Prentice Hall, 2001), 360. 37. Paper Prepared for J4Mat/DG Log by Cornwall WG, MA&S Optimization A Supply

Chain Alternative …, 1. 38. DGAEPM CF188 Concept of Operational Support under the Optimized Weapon System

Management June 2003 Version 1.0 39. John McLure, LGen (Retd) Fred Sutherland, and Robert Winsor, Achieving

Administrative Efficiency, Report to the Minister of National Defence by the Advisory Committee on Administrative Efficiency. August 21, 2003 Available at http://www.forces.gc.ca/site/Focus/AE/report/EXsumm_e.htm pg 5.

40. Ibid, 5. 41. Frank Camm, Leslie Lewis, Effective Treatment of Logistics Resource Issues in the Air

Force Planning, Programming, and Budgeting System Process …, xi. 42. Ibid, 24.

29

43. Ross Pigeau, and Carol McCann, Re-Conceptualizing Command and Control …, 60. 44. G.E. Sharpe, and Allan D. English. Principles for Change in the Post Cold War

Command and Control of the Canadian Forces (Winnipeg: Canadian Forces Materiel Production Centre, 2002), xiv.

45. John Joseph Coyle, Edward J. Bardi, and C. John Langley Jr. The Management of

Business Logistics (Minneapolis, West Publishing Company, 1996), 616. 46. Ronald H. Ballou, Business Logistics Management (Englewood cliffs, N.J. Prentice Hall

1992), 620. 47. John McLure, LGen (Retd) Fred Sutherland, and Robert Winsor, Achieving

Administrative Efficiency …, 2. 48. MASOP MUSE September 2003, 1 Available at

http://www.forces.gc.ca/admmat/cosmat/masop/index_e.htm 49. Ibid, 2. 50. Col D. Dion, DMMD, DMMD UPDATE: 2002 MMD Conference, October 2002, slide

25. Available at http://lognet.dwan.dnd.ca/dmmd/dmmd/2002Conf/DMMD-Col%20Dion-MMD%20Conf-10%20Oct.ppt

51. Telecon LCol Russell/Maj Yvan Dube PM DTAV, 24 September 2003. 52. John Joseph Coyle, Edward J. Bardi, and C. John Langley Jr. The Management of

Business Logistics (Minneapolis, West Publishing Company, 1996), 13. 53. Daniel G. Jacobs, “Anatomy of a Supply Chain” Transportation and Distribution 44, no

6 (Jun 2003): 60. 54. Integrated Supply Chain Management Concept Paper, Optimizing Logistics Support

Available at http://www.dod.mil/c…ller/center/learn/iscmconcept.htm pg 4 55. David A. Schrady, Combatant Logistics Command and Control for the Joint Forces

Commander …, 17. 56. Margaret Staib and Lori Michaelson “Air Force Spares Campaign: Purchasing and

Supply Chain Management” Air Force Journal of Logistics Vol XXVI, no 3 (Fall 2002): 31.

57. Helen Wraige, “The Lean Machine” Professional Engineering 30 (May 2001): 34. 58. Ibid, 35.

30

59. Margaret Staib and Lori Michaelson “Air Force Spares Campaign: Purchasing and

Supply Chain Management” Air Force Journal of Logistics …, 30. 60. Nancy Y. Moore, Laura H. Baldwin, Frank Camm and Cynthia R. Cook, Implementing

Best Purchasing and Supply Management Practices: Lessons From Innovative Commercial Firms Rand Publications, 2002 Available at http://www.rand.org/publications/DB/DB334/ …153.

61. Ronald H. Ballou, Business Logistics Management …, 611. 62. Debbie Alexander, John Gunselman, Judy Cox, and Johnathon Mathews. “Supply Chain

Command and Control.” Air Force Journal of Logistics 26, no. 3 (Fall 2002): 1. 63. Frank Camm, Leslie Lewis, Effective Treatment of Logistics Resource Issues in the Air

Force Planning, Programming, and Budgeting System Process …, 21. 64. Ronald H. Ballou, Business Logistics Management …, 622.

31

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